IL&FS bids to acquire Dighi Port to protect its equity stake

Cash-strapped Infrastructure Leasing & Financial Services Ltd (IL&FS), which is in the midst of a financial crisis caused by debt defaults, has filed an expression of interest to buy its associate company Dighi Port Ltd (DPL), which is facing insolvency proceedings under the bankruptcy law.

Dighi Port is a minor greenfield port located on the Rajpuri creek in Raigad district of Maharashtra, along the Konkan coast. It is a private port owned by Balaji Infra Projects Ltd and IL&FS Ltd. Dighi port is part of the Dedicated Freight Corridor and the Delhi-Mumbai Industrial Corridor.
Balaji Infra Projects Ltd is the promoter of the project although it holds only a minor stake
IL&FS, through its direct subsidiary IL&FS Maritime Infrastructure Co Ltd, holds a 39.38 per cent stake in Dighi Port Ltd. IL&FS Maritime holds an additional 29.90 per cent stake in Dighi Project Development Co Ltd, also an associate company.
IL&FS Maritime Infrastructure’s investment in Dighi Port Ltd equity was worth Rs297.458 crore as of 31 March 2018. The current value of IL&FS investment in the equity of Dighi Port is pegged at Rs207.1 crore while that of Balaji Infra Projects Ltd (BIPL) is Rs50 crore. IL&FS has also given a loan to DPL, on which the principal and interest due is Rs184.76 crore. The loan is secured by a pledge of 68.6 per cent equity shares of BIPL. The total direct and indirect exposure of IL&FS Group to Dighi Port is Rs532.220 crore.
As of 31 March 2018, IL&FS had recognised a cumulative impairment loss of Rs124.4 crore against its exposure in DPL and BIPL.
IL&FS said it is in the process of taking steps to protect its equity interest and exposure in Dighi Port and hence the interest in the resolution process of the port.
“The company has also obtained opinion from legal expert to determine its eligibility to submit a resolution plan for DPL. The recovery of the value of equity shares of DPL will largely depend on the positive outcome of the business revival plan, resolution process of the NCLT and the additional infusion of equity capital,” IL&FS said in its annual report for 2017-18.
Besides IL&FS, Adani Ports & SEZ Ltd, Jawaharlal Nehru Port Trust and JSW Infrastructure Ltd are vying to take over the port.
IL&FS Maritime Infrastructure is eligible to participate in the bidding process for Dighi Port under the bankruptcy law as it is not a promoter of the company.
IL&FS Maritime Infrastructure, which is 90.02 per cent owned by IL&FS, has submitted proof of claim as financial creditor in the bankruptcy proceedings of Dighi Port for claiming Rs206.3 crore. Its claim as financial creditor was admitted by the Interim Resolution Professional overseeing the insolvency process. IL&FS Maritime has also submitted claim for Rs7.4 crore as an operational creditor, out of which Rs4.3 crore claim was accepted and balance was under verification, the company said.
The Interim Resolution Professional has since been replaced by a Resolution Professional (RP) in accordance with an August 6 order of the Mumbai bench of NCLT.
Dighi Port has two multi-purpose berths having a quay length of 650 metres and is building three more multi-purpose cargo berths, of which one berth has been developed and the other two are under development.